ASX futures were 17 points or 0.2 per cent higher at 7101 near 8.00am AEDT, pointing to a strong opening of trade. US stock indexes closed higher Tuesday with investors buying shares in companies from across the industry spectrum.
The S&P 500 rose 0.8 percent, and the Dow Jones Industrial Average gained 1.1 percent. The tech-heavy Nasdaq Composite rose 1.3%.
Seven of the S&P 500’s 11 sectors were higher for the day, led by a 1 percent gain in the financials group and a 0.8 percent rise in the technology group. The energy sector was an outlier, dropping 2.5% as oil prices eased.
The locally-based S&P/ASX 200 finished up at 7186.7, up 1.1% and at an almost three-week high. Materials stocks surged 2.2%, with Silver Lake, BHP and Fortescue gaining 2.9%, 3.7% and 3.3%, respectively.
Financials rose 1.4%, with Macquarie soaring 3.9% after it said today better market conditions produced a “record quarter” for investors.
General insurers QBE, IAG and Suncorp all ended the day in positive territory, with Suncorp gaining 5.5% after 1H cash earnings and interim dividend exceeded estimates.
Travel stocks jumped as well after Australian authorities announced that the international border will open in a matter of weeks. Qantas added 1.1% and Flight Centre jumped 6.7%.
The tech sector was the day’s laggard, finishing 1.6% lower. Appen was the day’s big loser, down 7.4%, and Computershare retreated 2.4%.
Overseas, the pan-continental Stoxx Europe 600 was up less than 0.1%. Asian stock markets were mixed. Japan’s Nikkei 225 inched up 0.1 percent. The Hang Seng Index in Hong Kong was down 1 percent. In mainland China, the Shanghai Composite Index rose 0.7%.
In commodities, gold futures rose 0.3% to US$1828.30; Brent crude fell 1.7% to US$91.12 a barrel, while iron ore was up 1.1% at US$128.94.
In bond markets the Australian 10-year bond yield surged to 2.12%, its highest since 2019. The benchmark US 10-year Treasury yield rose to 1.96%. Yields fall when prices rise.
Near 8.30am AEDT, the Australian dollar was buying 71.43 US cents, up from a previous close of 71.25. The WSJ Dollar Index, which tracks the US dollar against 16 other currencies, inched up to 89.68.
Asia
Mainland Chinese stocks ended mixed on Tuesday, with coal miners gaining while electronics stocks fell. A surge in coal prices lifted the likes of China Shenhua Energy, Yankuang Energy and China Coal Energy, which rose between 4.2% - 6.2%.
Thirty-three Chinese companies including electronics firms, optics companies and Wuxi Biologics were added to a United States “unverified schedule,” which leaves them with stricter export restrictions. Shares in the sectors targeted came under selling pressure. WuXi AppTec plummeted 10% even after the company said it does not appear on the list, while Luxshare Precision, also not on the list, fell 7.0%.
The Shanghai Composite Index rose 0.7%, the Shenzhen Composite Index fell 0.2% and the ChiNext Price Index was down 2.4%.
In Hong Kong, stocks finished lower as a selloff in biotech company Wuxi Biologics dragged shares down after the US Commerce Department put two of its units onto an “unverified list.” When trading was halted, the stock was down 23%. The hefty losses dragged the benchmark Hang Seng Index down 1.0%.
Further pressure came from tech companies, with the sector following weakness in the US tech-heavy Nasdaq overnight. Alibaba Health tumbled 7.5% and Alibaba was down 3.3%.
Elsewhere in Japan, the Nikkei Stock Average rose 0.1% amid ongoing optimism about an earnings rebound from the pandemic. Financial stocks lent support, with Mitsubishi UFJ Financial Group up 1.5% and Sumitomo Mitsui Financial Group climbing 1.7%.
Other major winners included Coca-Cola Bottlers Japan, which soared 6.4% after the company announced a price increase on large bottle products. Maruichi Steel Tube jumped 6.9% after lifting FY view and announcing a share buyback.
Europe
European stocks closed mixed as speculation the European Central Bank will raise interest rates this year lifted bank stocks. The pan-European Stoxx 600 was little changed.
Among the best performers were lenders such as Banco de Sabadell, Deutsche Bank and ING. The biggest loser was Ocado, which saw its shares tumble 13% after a 12% drop in annual core earnings.
“Despite a quieter week, which is a welcome relief after the up and down of last week, there still seems to be no evidence of any real renewal of risk appetite,” said IG analyst Chris Beauchamp.
In London, the FTSE 100 fell 0.08% as a fall in oil prices weighed on the energy sector. BP shares rose in early trading after it said that profits were better than expected in the fourth quarter and suggested that it would consider further buybacks. Shares eventually drifted back, but both BP and Shell remain up more than 20% year to date.
Telecoms group Airtel Africa saw shares fall after investors sold 1.5% shares at a discount, while Ocado retreated to 22-month lows. Vodafone shares had little reaction to reports of a bid from French mobile carrier Iliad to take over 100% of its Italian operation.
North America
U.S. stock indexes climbed Tuesday as investors scooped up shares of companies across sectors.
The S&P 500 rose 0.8 percent, and the Dow Jones Industrial Average gained 1.1 percent. The tech-heavy Nasdaq Composite rose 1.3%.
Seven of the 11 sectors in the S&P 500 were higher for the day, with financials rising 1 percent and the technology group up 0.8 percent. The energy sector deviated from trend, down 2.5% as oil prices slid.
The S&P 500 remains down 5.5 percent in 2022 following a sell-off in January.
“It just seems that people are very happy kind of buying the dip,” said Katie Nixon, chief investment officer at Northern Trust Wealth Management. “We really have quite solid market across the board here.”
Stocks have gotten support from a generally solid earnings season. With results now in from about 60% of S&P 500 companies, analysts expect profits to have risen 30% in the fourth quarter versus a year earlier, according to FactSet — up from estimates of 21% growth at the end of September.
Still, several companies have taken a cautious tone about the road ahead. As of late last week, 34 companies in the S&P 500 had provided first-quarter earnings guidance that was below analyst expectations, while 13 had offered guidance above expectations.
“The guidance we are hearing from companies is understandably cautious,” said Tom Plumb, president and portfolio manager at Plumb Funds. “It’s adding fuel, in some cases, to the anxiety people have about political and economic events and Federal Reserve policy.”
Markets have been volatile with jagged trading, partly driven by expectations of rising interest rates. Investors are assessing which companies are better positioned to withstand a more challenging outlook.
“The question is, does the Fed get it right? Do they balance themselves just right, between raising rates and tightening policy enough to crush inflation, while not hurting the economy?” said Peter Langas, chief portfolio strategist at Bessemer Trust.
Tech companies, last year’s market stars, have led recent volatility as higher interest rates challenge their valuations. Big-cap tech stocks have been especially choppy.
Shares of Apple and Amazon.com each gained over 1% Tuesday, while Facebook parent Meta Platforms dropped 2.2%. Meta shares plunged last week following a steep profit drop and disappointing outlook.
“Investors will be scrutinizing the underlying fundamentals and long-term drivers of growth and strategy more broadly across the entire tech spectrum,” said Mr. Langas. “Firms that are able to grapple with threats firmly are going to be rewarded, and those that struggle will be punished.”
Brent crude dropped 2.1 percent to US$90.78 a barrel amid talks to renew a nuclear deal with Iran, which could increase global oil supply.
Oil price declines dragged energy stocks. Chevron fell 1.5 percent and Exxon Mobil declined 2.5 percent.
Some individual stock moves were driven by earnings. Pfizer dropped 3 percent after missing revenue expectations. Harley-Davidson jumped 15% as it returned to a fourth-quarter profit.
Peloton Interactive rose 25 percent after announcing CEO changes, board revamp, and cost cuts. The company will report earnings after the market closes.
Nvidia gained 1.9% after it abandoned its acquisition plan of Arm.
Investors pulled back from bonds, expecting the Federal Reserve to raise interest rates. The US 10-year Treasury yield climbed to 1.96%, the highest since July 2019.
Bitcoin traded at around US$42,867, down 2.7% from Monday. It had climbed above US$45,000 earlier Tuesday before paring gains.
